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Shares of DuPont, Dow soar on reports of merger talks

Shares of DuPont, Dow soar on reports of merger talks

DOVER, Del. (AP) — Shares of Dow Chemical and DuPont climbed Wednesday amid reports that the two chemical giants are in advanced merger discussions.

The Wall Street Journal reported Tuesday that the companies were planning to merge and then split into three companies focused on agriculture, specialty chemicals and materials.

Shares of The Dow Chemical Co. rose 12 percent to close at $56.97. Stock of DuPont, formally called E. I. du Pont de Nemours and Co., also gained 12 percent, to $74.49.

The two companies declined to comment on reports of a possible merger. The Journal said a deal could be announced 'in coming days.'

A merger of DuPont and Dow, each with a market capitalization of more than $60 billion, would create the world's second-largest chemical company, behind BASF SE. DuPont employs more than 60,000 people worldwide, while Dow has more than 50,000 employees. A merger likely would result in significant job cuts because of overlapping businesses.

'DuPont has always been a great partner with our state, and we expect the lines of communication to remain open if anything significant were to materialize,' said Kelly Bachman, a spokeswoman for Delaware Gov. Jack Markell.

Dow, based in Midland, Michigan, was founded in 1897 by Canadian-born chemist Herbert Dow to produce bleach using new technology he had developed to extract chlorine from brine. DuPont was founded in 1802 by French immigrant E.I. DuPont, who established a gunpowder manufacturing operation along the Brandywine River in Wilmington, Delaware.

In the years since, the two companies expanded into a wide range of specialty and commodity chemical operations. Resulting products included Ziploc sandwich bags and Saran wrap developed by Dow and Dupont's Teflon coatings and Kevlar body armor. In recent years, however, both companies have focused on agriculture, as global demand for increased food supplies has driven sales of genetically engineered seeds, fertilizer, herbicides and pesticides.

In 2006, DuPont's agricultural unit was its fourth-biggest business by operating income. By 2008, it was the company's largest business segment. Dow AgroSciences had global sales of $7.3 billion in 2014, or about 12.5 percent of revenue.

But the two companies have struggled recently with weak agriculture sales. Falling crop prices have put pressure on suppliers of seeds and pesticides while fueling merger discussions within the industry.

'I'm not naive about what's going on in the ag space right now,' DuPont CEO Edward Breen said in an October analyst call. 'I am personally talking to the CEOs of some of the other companies. So something will give here on the ag side. And I would say, just looking at it, consolidation should happen.'

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